Post by tomsylver on Aug 11, 2017 20:23:01 GMT
Tesaro: Strong Zejula Launch Bodes Well But Concerns Remain
Aug. 11, 2017 3:34 PM ET|2 comments| About: Tesaro (TSRO)
Summary
Shares have fallen by roughly 25% since I first initiated coverage.
Zejula sales for the second quarter point to a strong launch.
Enrollment continues for studies that are key to the company's expansion efforts. ESMO data in September is an important catalyst.
Competition from Clovis' Rubraca and AstraZeneca's Lynparza is a concern, as label expansion efforts are likely to pay off.
I still believe the company's intriguing immuno-oncology assets are being overlooked. Risks include trial setbacks, disappointing data and dilution.
Shares of Tesaro (NASDAQ:TSRO) have seen a quarter of their value dissipate since I suggested investors buy the post-approval dip.
ChartTSRO data by YCharts
Reasons for optimism on the story included the following:
Early approval of Zejula (niraparib) as the first PARP inhibitor to be indicated beyond patients with BRCA mutations.
Expansion opportunities with pivotal trials to be initiated in metastatic ovarian, breast, and lung cancers.
An overlooked early-stage immuno-oncology pipeline being studied as monotherapy and in combination trials.
Upcoming data readouts later in the year from the QUADRA, BRAVO and AVANOVA studies.
The very real possibility of being acquired by a larger pharmaceutical concern.
What's Happened Since
On
August 8th, the company reported results for the second quarter, with Zejula sales totaling $26 million. Over 1,500 new patients were treated and prescriptions written by over 1,000 physicians, making it the most prescribed PARP inhibitor in the United States.
The drug was actually launched in April for the maintenance treatment of adult patients with recurrent epithelial ovarian, fallopian tube, or primary peritoneal cancer who are in a complete or partial response (CR or PR) to platinum-based chemotherapy.
Figure 2: Front runner soon after launch (Source: Corporate Presentation)
The company is hopeful for approval in Europe in the near term, which would allow for launch in the region by the end of the year. Its expanded access program has enrolled over 200 patients across nine European countries.
Enrollment continues for the following studies:
PRIMA trial in first-line ovarian cancer.
QUADRA trial for the treatment of patients with ovarian cancer who have received three or more prior lines of chemotherapy.
TOPACIO trial combined with Keytruda in patients with platinum resistant ovarian cancer or with triple negative breast cancer.
AVANOVA trial combined with bevacizumab in patients with recurrent ovarian cancer.
Data from the latter two studies will be presented at the European Society for Medical Oncology (ESMO) Congress in September and represents an important catalyst.
Other Developments
In regards to material developments for other assets, the company has finished planning the registration strategy for its anti-PD-1 drug candidate TSR-042 in patients with metastatic microsatellite instability-high cancers. Data from early-stage trial will also be forthcoming at ESMO. Management believes that accelerated approval is a distinct possibility.
Immuno-oncology assets TSR-022 (anti-TIM-3) and TSR-033 (anti-LAG-3) continue to progress, with the former completing dose-escalation as a monotherapy and the latter being utilized in a phase 1 dose-escalation trial. A combination study utilizing TSR-022 and TSR-042 is also continuing as planned.
The oral formulation of Varubi was the most prescribed oral NK-1 receptor antagonist in the United States during the quarter while the company's New Drug Application is being reviewed by the FDA with a PDUFA data of October 25th.
Figure 3: Varubi unit sales growth (Source: Corporate Presentation)
Final Thoughts
As of June 30th, the company had a cash position of $508 million (doesn't include the $100 million up-front payment from Takeda (OTCPK:TKPYY)) compared to a second-quarter net loss totaling $152.1 million. The smaller firm could receive up to $240 million in regulatory and commercial related milestones.
I am very optimistic on the company's expansion efforts for Zejula - in the phase 1 portion of the AVANOVA trial, an objective response rate of 42% (5/12) was observed with median duration of treatment in all patients of 41.7 weeks.
Figure 4: Niraparib centered pipeline along with I-O assets (Source: Corporate Presentation)
Risks include disappointing data in niraparib expansion studies as well with immuno-oncology assets in addition to clinical setbacks. Dilution in the medium term is also a risk, as management may wish to fortify the balance sheet to back launch efforts. Competition with Clovis' (NASDAQ:CLVS) Rubraca and AstraZeneca's (NYSE:AZN) Lynparza is also a concern, as label expansion efforts for these two will likely pay off.
Taking all the above into consideration, I believe shares are still undervalued at current levels with Zejula likely to achieve blockbuster status in a few years. The stock has been acting incredibly weak, so there's no rush to buy a falling knife. $100 is an important psychological level to keep an eye on.
Author's note: My goal is to bring to readers' attention to undervalued stocks with catalysts that could propel shares higher, as well as provide a fresh perspective on stocks you may already be aware of. I also touch on planning trades and risk management, as those are two areas I feel are often neglected. If you found value in the above article, consider clicking the orange "follow" button and getting email alerts to receive my latest content. My sincere appreciation for readers who add value and join the discussion in the comments section, as well as those who share my work with others who could benefit from it.
Disclaimer: Commentary presented is not individualized investment advice. Opinions offered here are not personalized recommendations. Readers are expected to do their own due diligence or consult an investment professional if needed prior to making trades. Strategies discussed should not be mistaken for recommendations, and past performance may not be indicative of future results. Although I do my best to present factual research, I do not in any way guarantee the accuracy of information I post. Investing in common stock can result in partial or total loss of capital. In other words, readers are expected to (and encouraged) form their own trading plan, do their own research and take responsibility for their own actions. If they are not able or willing to do so, better to buy index funds or find a thoroughly vetted fee-only financial advisor to handle your account.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Aug. 11, 2017 3:34 PM ET|2 comments| About: Tesaro (TSRO)
Summary
Shares have fallen by roughly 25% since I first initiated coverage.
Zejula sales for the second quarter point to a strong launch.
Enrollment continues for studies that are key to the company's expansion efforts. ESMO data in September is an important catalyst.
Competition from Clovis' Rubraca and AstraZeneca's Lynparza is a concern, as label expansion efforts are likely to pay off.
I still believe the company's intriguing immuno-oncology assets are being overlooked. Risks include trial setbacks, disappointing data and dilution.
Shares of Tesaro (NASDAQ:TSRO) have seen a quarter of their value dissipate since I suggested investors buy the post-approval dip.
ChartTSRO data by YCharts
Reasons for optimism on the story included the following:
Early approval of Zejula (niraparib) as the first PARP inhibitor to be indicated beyond patients with BRCA mutations.
Expansion opportunities with pivotal trials to be initiated in metastatic ovarian, breast, and lung cancers.
An overlooked early-stage immuno-oncology pipeline being studied as monotherapy and in combination trials.
Upcoming data readouts later in the year from the QUADRA, BRAVO and AVANOVA studies.
The very real possibility of being acquired by a larger pharmaceutical concern.
What's Happened Since
On
The drug was actually launched in April for the maintenance treatment of adult patients with recurrent epithelial ovarian, fallopian tube, or primary peritoneal cancer who are in a complete or partial response (CR or PR) to platinum-based chemotherapy.
Figure 2: Front runner soon after launch (Source: Corporate Presentation)
The company is hopeful for approval in Europe in the near term, which would allow for launch in the region by the end of the year. Its expanded access program has enrolled over 200 patients across nine European countries.
Enrollment continues for the following studies:
PRIMA trial in first-line ovarian cancer.
QUADRA trial for the treatment of patients with ovarian cancer who have received three or more prior lines of chemotherapy.
TOPACIO trial combined with Keytruda in patients with platinum resistant ovarian cancer or with triple negative breast cancer.
AVANOVA trial combined with bevacizumab in patients with recurrent ovarian cancer.
Data from the latter two studies will be presented at the European Society for Medical Oncology (ESMO) Congress in September and represents an important catalyst.
Other Developments
In regards to material developments for other assets, the company has finished planning the registration strategy for its anti-PD-1 drug candidate TSR-042 in patients with metastatic microsatellite instability-high cancers. Data from early-stage trial will also be forthcoming at ESMO. Management believes that accelerated approval is a distinct possibility.
Immuno-oncology assets TSR-022 (anti-TIM-3) and TSR-033 (anti-LAG-3) continue to progress, with the former completing dose-escalation as a monotherapy and the latter being utilized in a phase 1 dose-escalation trial. A combination study utilizing TSR-022 and TSR-042 is also continuing as planned.
The oral formulation of Varubi was the most prescribed oral NK-1 receptor antagonist in the United States during the quarter while the company's New Drug Application is being reviewed by the FDA with a PDUFA data of October 25th.
Figure 3: Varubi unit sales growth (Source: Corporate Presentation)
Final Thoughts
As of June 30th, the company had a cash position of $508 million (doesn't include the $100 million up-front payment from Takeda (OTCPK:TKPYY)) compared to a second-quarter net loss totaling $152.1 million. The smaller firm could receive up to $240 million in regulatory and commercial related milestones.
I am very optimistic on the company's expansion efforts for Zejula - in the phase 1 portion of the AVANOVA trial, an objective response rate of 42% (5/12) was observed with median duration of treatment in all patients of 41.7 weeks.
Figure 4: Niraparib centered pipeline along with I-O assets (Source: Corporate Presentation)
Risks include disappointing data in niraparib expansion studies as well with immuno-oncology assets in addition to clinical setbacks. Dilution in the medium term is also a risk, as management may wish to fortify the balance sheet to back launch efforts. Competition with Clovis' (NASDAQ:CLVS) Rubraca and AstraZeneca's (NYSE:AZN) Lynparza is also a concern, as label expansion efforts for these two will likely pay off.
Taking all the above into consideration, I believe shares are still undervalued at current levels with Zejula likely to achieve blockbuster status in a few years. The stock has been acting incredibly weak, so there's no rush to buy a falling knife. $100 is an important psychological level to keep an eye on.
Author's note: My goal is to bring to readers' attention to undervalued stocks with catalysts that could propel shares higher, as well as provide a fresh perspective on stocks you may already be aware of. I also touch on planning trades and risk management, as those are two areas I feel are often neglected. If you found value in the above article, consider clicking the orange "follow" button and getting email alerts to receive my latest content. My sincere appreciation for readers who add value and join the discussion in the comments section, as well as those who share my work with others who could benefit from it.
Disclaimer: Commentary presented is not individualized investment advice. Opinions offered here are not personalized recommendations. Readers are expected to do their own due diligence or consult an investment professional if needed prior to making trades. Strategies discussed should not be mistaken for recommendations, and past performance may not be indicative of future results. Although I do my best to present factual research, I do not in any way guarantee the accuracy of information I post. Investing in common stock can result in partial or total loss of capital. In other words, readers are expected to (and encouraged) form their own trading plan, do their own research and take responsibility for their own actions. If they are not able or willing to do so, better to buy index funds or find a thoroughly vetted fee-only financial advisor to handle your account.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.